TDS on Salary: Section 192 of the Income Tax Act, 1961

The salary received by an employee from his/her employer is categorized under the head “Income From Salary”. Here the employer is responsible for deducting TDS on an average rate of Income Tax based on the current slab rate during the relevant financial year by considering your estimated income.

Here in this article, we will discuss, Section 192 of the Income Tax Act, 1961. This section deals with the tax deducted at the source of salary Income.

Section 192 of the Income Tax Act, 1961

TDS on Salary- Section 192 says that every person who is responsible for paying any income chargeable “Under The Head Salary” is required to deduct TDS. Thus the provision of section 192 applies only if the following 3 conditions are satisfied.

🎯 There is an employer and employee.

🎯 The payment made by the employer to the employee is in the nature of salary.

🎯 The income chargeable under the head salary is over and above the maximum amount not chargeable to tax. (according to applicable Income Tax Slab)

Also Read- What is the due date of the Income Tax Return Filing?

Who can deduct TDS under section 192

All employers are required to deduct TDS. The employer’s status (e.g. HUF, company firm, etc.) under the act is irrelevant. Moreover, the number of employees employed by the employer while calculating and deducting TDS.

As per section 192 of the Income Tax Act, the relevant thing is that there should be an employer and employee relationship. The tax deducted should be deposit in the government account on a timely basis.

Time for deduction of TDS on salary- When to deduct

The liability to pay TDS arises at the time of actual payment of salary and not during the accrual of salary. If the employer makes payment of some advance or of some arrear to the employee then the liability will arise and the employer is required to deduct TDS at that time.

The rule is also applicable for those who don’t have PAN Number, in that case TDS shall be deducted 20% without including Health and education cess.

Must Read- How to Apply for PAN card online- Know Application Process

Time limit for the deposit of TDS- When to deposit in government account

Normal Deductor- The due dates for payment of TDS are the 7th of next month in which TDS is deducted/credited and for the month of March, it is 30th April.

Government office- In case of government deductee the deposit of TDS should be made on the same day. (Without the payment of challan) and if the tax is paid accompanied by an income-tax challan, then the same need to be deposited within 7 days of the subsequent month in which TDS is deducted.

It is to be noted that TDS is to be deposited vide challan no. ITNS 281.

Rate of TDS on Salary – Section 192 of the Income Tax Act, 1961

For Tax Deduction at Source Rate (TDS Rate) on salary, there is no fixed rate of TDS. It is to be deducted at the average rate of income tax (Calculated according to the applicable slab for the respective year.)

It is to be noted that the requirement of deducting TDS u/s 192 shall be worked out, after considering all the exemption, allowance, rebate, and deductions that are available to the employee.

Also Read: TDS returns and forms- All about Form 24Q, Form 26Q, Form 16, and Form 16A

Filing of TDS Return – Form 24Q For TDS on Salary

The Employer is required to furnish a quarterly return in form 24Q within the following prescribe due dates-

QuarterMonthDue Date
1st QuarterApril-JuneOn or before 31st July
2nd QuarterJuly-SeptemberOn or before 31st October
3rd QuarterOctober-DecemberOn or before 31st January
4th QuarterJanuary-MarchOn or before 31st May

Also Read- Know the Difference Between Form 24Q and Form 26Q

Time Limit for providing TDS statement

The employer is required to provide form 16 to the employee containing the details of salary such as the amount paid and tax deducted etc. The time limit is 31st May of the next financial year in which the TDS is deducted.

Specific Cases under section 192 of the Income Tax Act, 1961

Applicability of TDS in case the employee is simultaneously working under more than one employer –

In case the employee is working with more than one employer, simultaneously, then, the employee is required to provide details of salary earned by him from other employers in Form 12B to any one of the employers. The employer to whom the details are provided in Form 12B would be responsible for deducting the TDS after considering the details so provided.

Applicability of TDS on salary in case of change in employment during the year –

In case of a change in employment, the employee is required to intimate his current employer details about his previous salary and TDS deduction in Form 12B.

Based on the details provided by the employee, the current employer will have to deduct tax at the source after taking into account TDS deducted by the earlier employer, salary received from the earlier employer, etc.

TDS applicability on non-monitory perquisites –

As per provisions of section 192 (1A), the employer has the option to make payment of the whole of the tax or part of the tax due on the non-monitory perquisites. The tax, if any, paid by the employer shall be deemed to be the TDS made from the salary of the employee, however, in terms of section 198, the said tax will not be deemed to be the income of the employee.

Also Read: Types of ITR Forms- which ITR form should I filed?

Payment of salary in foreign currency–

In such a case, first of all, salary will be converted into Indian currency. Here the rate of exchange will be the last day of the month immediately preceding the month in which the salary is due or is paid in advance or in arrears.

For Example- If salary is paid in the month of June in foreign currency then the rate of exchange shall be taken which prevails on 31st May.

After conversion, calculate TDS as per the normal provision of TDS deduction.

Some Important Points

🎯 Remuneration paid to the director by the company is not covered under section 192 of the Income Tax Act, 1961. TDS on remuneration paid to director is covered u/s 194J of the Act, provided that there is no employer-employee relationship exist.

🎯 Payment made by the hospital to the doctor is considered as professional fees hence TDS is not applicable under section 192 of the Income Tax Act and TDS u/s 194J will be applicable. But if there is an employer-employee relationship or contract of service is exists then TDS u/s 192 is applicable.

Also Read- Remuneration and Interest to partners, calculation of book profit under section 40b of the Income Tax Act. 1961.

Frequently Asked Questions- FAQs

  1. How much is the TDS on salary?

    For Tax Deduction at Source Rate (TDS Rate) on salary, there is no fixed rate of TDS. It is to be deducted at the average rate of income tax (Calculated according to the applicable slab for the respective year.)

    It is to be noted that the requirement of deducting TDS Section 192 of the Income Tax Act shall be worked out, after considering all the exemption, allowance, rebate, and deductions that are available to the employee.

  2. Who is responsible to deduct TDS on salary?

    All employers are required to deduct TDS. The employer’s status (e.g. HUF, company firm, etc.) under the act is irrelevant. Moreover, the number of employees employed by the employer while calculating and deducting TDS.

    As per section 192 of the Income Tax Act, the relevant thing is that there should be an employer and employee relationship. The tax deducted should be deposit in the government account on a timely basis.

  3. Section 192(2b) of the Income Tax Act

    Section 192(2B) enables a taxpayer / employee to furnish particulars of income under any head other than “Salaries” to his employer for inclusion in taxable income and deduction of tax at source.

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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.

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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)

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